EUR/USD finds decent support at 1.2200 handle

Haresh Menghani FXStreet

• German political news prompts some profit-taking.
• ECB headlines add to the downward pressure.
• Goodish USD rebound further contributes to the weaker tone.

The EUR/USD pair remained under some selling pressure through the mid-European session and eroded a major part of previous session's strong up-move to 3-year tops.

The pair stalled its strong bullish momentum near the 1.2300 handle and the initial leg of corrective slide on Tuesday was triggered by the latest German political news, wherein Berlin's SPD section has rejected the proposal of coalition talks to form a Grand Coalition in Germany.

The downfall accelerated further in wake of the news headlines, via Reuters, that the ECB is unlikely to drop the bond-buying pledge until inflation hits the target next week.

Meanwhile, a strong US Dollar recovery from a three-year trough, around the 90.00 handle touched in the previous session further collaborated to the pair's retracement slide to 1.2200 handle.

The pair, however, has managed to bounce off lows and is currently placed around the 1.2230-35 region as traders now look forward to the only scheduled release of Empire State Manufacturing Index from today's US economic docket. The key focus, however, would be on the final EZ CPI print, due for release during the European session on Wednesday.

Technical levels to watch

On a sustained weakness below the 1.2200-1.2190 region, the corrective slide could get extended towards 1.2125 intermediate support en-route the 1.2100 handle. On the upside, mid-1.2200s now seems to act as an immediate hurdle, above which the pair is likely to make a fresh attempt towards conquering the 1.2300 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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